“At this moment, Romania no longer has a price advantage on the natural gas segment, but it has gained in terms of security of supply. The problem is it takes more sources to boost liquidity, it takes many players on each segment,” says Hajdinjak, who runs the only integrated energy and gas distributor in Romania.
While several years ago all the major utilities companies congratulated international bodies for pushing Romania to deregulate its gas market, later on the same utilities companies grew aware that calendar application was too abrupt.
According to Hajdinjak, the company coped with major problems at the start of this year, severe cash problems generated particularly by the lower distributed volumes and the situation may continue this year. The industry was not ready for the pace at which deregulation was implemented, says E.ON Romania head.
Additionally, deregulation came as the market is little transparent, being dominated by two local producers with equal weights, Petrom and Romgaz, and two significant importers bringing only Russian gas. Moreover, just a little share of gas produced locally is traded in a transparent manner on the bourse.
According to company data, E.ON distributed around 12% less gas last year, with the Dutch-held company also posting declines in the field of electricity. Nonetheless, Hajdinjak says the level of revenue is similar with that of 2013 owing to price hikes.
Volume estimates are not highly upbeat for 2015, either, with the complete liberalization of gas prices on the non-household segment starting January 1 as one of the reasons.
At the beginning of this year, E.ON completed the merger of the two distribution companies held locally. E.ON Distributie Romania started operating on January 1. E.ON Distributie Romania operates an over 20,000-km long natural gas network and an over 80,000-km long electricity network, with around 3 million clients and covering counties in northern Romania.
Hajdinjak says the new structure will bring significant savings, but no layoffs will be operated amid the merger.
“We will add more services to our portfolio as we want to turn into a one-stop shop on the segment of utilities”.
In early 2014, E.ON head said one of the growth possibilities in Romania would be to invest in small production units located near consumption points. The company has taken no steps in this direction, but Hajdinjak says this plan will not be abandoned.
For 2015, Hajdinjak counts on revenue similar with the 2014 level provided there are no significant volume declines on the energy and natural gas market.
“Last year, we supplied 22.3 TWh of natural gas and around 5 TWh of electricity”.
For 2015, E.ON has budgeted investments of EUR100 million both on the energy and natural gas segments, particularly in network upgrading.
According to Hajdinjak, no country in the group has such a high level of blackouts as Romania, and this will not change without investments, and investments depend on the regulated rate of return, as well as on some taxes that were introduced overnight.
Nonetheless, E.ON Romania head says that the Romanian market is a good and fair one. The local market has come to be among the core five markets for E.ON.
(English version by Catalina Apostoiu)